Scout Sniper Basic Field Guide - InnerCircleTrader

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EURUSD - past two weeks 3 ideal trade set ups
 

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Intraday Fiber - could still break yesterdays high to
 

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kongzz said:
Yields diverging.

When we say foreign currencies chase yield, does it mean the money will flow into higher yield currencies? In this example, I can see USD yield is going higher and therefore Euro will chase USD yield and more Euro will be flowing into USD buying which will strengthen USD? Can someone please comment? Thanks
 
Hopiplaka said:
For those who are tempted to go long EU (because the 9/18EMA D1 still tells so), a warning for the next couple of days/weeks...
Bond prices are also up = lower yields = lower foreign currency prices

Didn't expect it to go back to the daily 79% OTE level :eek:

Still, bond prices are up, so I make look for a nice short again next week, maybe first get some stops that still reside @ 1.3820 level?
 
Taking a look back in Fiber Feb close
 

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foreigner said:
What suggested a bullish cycle on Thursday if yields where down and price had been diverging
Cheers
F

In actual fact, T notes where down weren't they? does that count? I am not totally up to speed yet with Yield divergence and the like, ICT said, currencies follow yield and T notes are opposite if you follow the futures market. So if T notes where down and yield was down into the week, there is divergence in itself, with EURUSD creating a swing high taking out all the stops above into the end of the month, i had a feeling that would happen, and it did. So where does that leave the bias for next month, maybe dollar has not found a bottom yet!
(i will rephrase that, Dollar was looking for a bottom!)

and just a note, i read that T note bills are calculated Daily by the big banks, so maybe something goes on there to, im not sure! but it makes me think T notes are one to keep an eye on, into the week, along with technical set ups.
maybe thats the double wammy, followed yield, then created the swing high away from the T note drop. in the end looking for liquidity pools and following ICT's advise on trade set ups is key, keeping the yield and T notes as a back drop, that's how i look at it anyway 8)
 
May be I was confused with bond - yield understanding. I have checked my notes again (copied below). In summary, yields are to go higher soon which will strengthen GBP and Euro further? It would be helpful if someone can explain the current yield - bond relationship with the help of some charts. Thanks

Yields go down when bond traded value goes up, yield up when bond down
us yields up, bonds are down, money flows out of US bonds, would be bearish dollar and bullish cable/fiber

-- "If yields are dropping and one of the 3 yields fails to make a lower low, look for US$ to bounce (vice versa)"
US yields drop and one fails to lower low, the one failing could signal reversal for all 3, therefore could expect yields to reverse up and, see above, USD down

-- "As yields are increasing that is bullish for foreign currencies, as they drop it is bearish for foreign currencies"
yes

-- "Risk is on when yields are going up and risk is off wen yields are declining because foreign currencies chase yield"
yes US yields up is bond down, dollar out of bonds, flows into shares and foreign currency, risk on. selling dollar and buying foreign currency takes the pair up (cable, fiber). Risk off is reverse scenario, money buys usd, dollar up pairs down

-- "Yields dropping is a risk off scenario, meaning we are looking for sells until we see a divergence in the yields"
yes, yields down is risk off

-- "The US$ should be rallying as yields drop"
yield drop is bond up, usually usdx up

to recap, normally:
yield up is bond down, dollar down, risk on, shares up, pairs up
yield down is bond up, dollar up, risk off, shares down, pairs down.
 
Hopiplaka said:
For those who are tempted to go long EU (because the 9/18EMA D1 still tells so), a warning for the next couple of days/weeks...
Bond prices are also up = lower yields = lower foreign currency prices

Hopiplaka,

This is exactly what is confusing me, so which are we to follow for directional bias, the 9 and 18 ema, or the Bond prices up = lower yields = lower foreign currency, and vice versa analysis ?

What action would one take here ?
 
The EMA is a bit of a lagging indicator. Especially when there is a War brewing in eastern Europe at the moment. Which means there's going to be some "flight to safety".

The USDJPY moved 30ish pips towards the Yen in late trading Friday, likely on the news that Ukraine is being invaded. That's going to cause a move out of the Euro, maybe. Monday's LO is going to be wild if things keep up on Sunday.
 
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--

Also, one thing I've noticed that confuses most people on ICT's work is the bond's correlation / divergence setup and how it impacts trade decisions. I wonder if we can't get the final word on this once and for all? *pokes ICT*
 
It seems pretty clear that when a Bond/Yield divergence happens, it indicates changing market conditions. I think it's a matter of how to "read" that which gets a little murky. (Also, some pairs seem to respond to different body signals, also leading to confusion)
 
Can anyone remember what field guide Part? series number? that ICT went through barchart.com explaining t note yields?

this is the chart i watch through the week
http://www.barchart.com/quotes/futures/V2Y0 click on the chart, then 1 week tab

if you click on the 1 year tab, i think its trying to test/break those lows in Nov possibly, looks like a liquidity pocket down there
 

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